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GBS supports corporate restructuring: A hybrid delivery

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When companies are divided into two, support operations struggle to follow. However, when executed at scale and with speed, the GBS concept can enable a company that has recently been split away to access top-of-the-line outside support and facilities within a very short period.

Many managers view the shared-service concept in the narrowest terms. They see it only as a way to take services that were once offered at multiple sites and handle them in a more cost-efficient manner at a single location. However, a shared-service platform can do more. As Genpact’s experiences helping a large consumer products company illustrate, the right platform can flexibly facilitate the building of a global business “ecosystem” that supports corporate strategy.

After splitting its operations, this Fortune 500 client set out to create a shared-service entity in the Philippines to support part of the business. Building that organization quickly and efficiently was critical to avoiding disruption to the business. With Genpact’s help, the organization was able to sketch a road map for gradually migrating and consolidating key finance and accounting (F&A) functions in the Philippines that were being handled separately in the US, Europe, and the Asia Pacific regions. These functions were to be folded under the umbrella of a single-shared services center (SSC) captive in Manila. It would act as a center of gravity for global F&A activity even as the company continued to run a regional SSC in Europe.

From zero to 100 employees within nine months flat

What follows is a story of starting from scratch and going from an almost zero presence in Manila to operating a full-fledged SSC with 100 full-time employees within nine months. In that same time span, the integrated project team collaboratively moved from designing the new operating model to building the center to hiring and training resources.

This is also the story of hours-long, late-night calls between multiple locations separated by thousands of miles. The task of migrating, merging, and then bringing the client’s culture to its new captive in Manila would not be easy, and the cost of early failure would be unforgivably high. If this first leg of transition did not go smoothly, the greater vision of setting up a global hub would be a nonstarter in the eyes of the client’s senior leaders.

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The collaborative partnership gave the client on-call access to an experienced team of dedicated Genpact project-management experts and provided human resources from across Genpact’s transition, training, HR, IT, finance, legal, facilities, service delivery, and continuous improvement specialty areas. It also enabled the client to immediately tap the knowledge, methodologies, and frameworks of the entire Genpact organization, including the advice of senior Genpact leaders.

Perhaps most importantly, Genpact’s Business Process Management and Transition teams jointly developed a customized map for solution design and migration methodology. This mapping, if followed, would serve as a template for all future shared-service migrations the client had in mind not solely in F&A but also in functions well beyond the purview of finance.

Leveraging existing infrastructure to accelerate the journey

The efforts to create a new kind of SSC that the client could evolve into a mature Global Business Services (GBS) ecosystem began at the client’s US headquarters. Managers there had longer-standing familiarity with end-to-end workflows and the insight required to identify process breaks and to smooth transitions. On the other side of the migration, the processes that had been newly transplanted to Manila needed to be rooted in a nurturing environment that allowed them to take hold and scale.

To address this need, Genpact established what it informally referred to as a “penthouse captive.” This transitional entity acquired its nickname because it was situated on the top floor of a building in Manila where Genpact was already running operations to support other global clients. This initial collocation approach let Genpact “facilitate from the front” in a way that accelerated the establishment of the client’s formal presence in the Philippines and the setup of the permanent future SSC facility.

In particular, the client quickly benefited from Genpact’s firm understanding of local infrastructure and talent pools. Among other things, this understanding was used to help the client familiarize itself more quickly with the Filipino business culture and regulatory environment. For instance, Genpact assisted the client in clearing major bureaucratic hurdles, such as registering with Filipino authorities as a business that was legally sanctioned to operate in the country.

Genpact’s in-country HR experts also helped with recruiting and conforming personnel policies and practices to the unique employment environment in Manila. Impressively, despite significant bureaucratic and logistical challenges, only two months out of the nine spent bringing the client’s SSC online went to hiring the first wave of 100 employees.

This ability to establish the client’s legal, physical, and human presence so quickly in a country in which the client previously had none proved pivotal.

This ability to establish the client’s legal, physical, and human presence so quickly in a country in which the client previously had none proved pivotal. In essence, the collocation startup approach, coupled with Genpact’s connections to the local government and business community, enabled the client to draw on Genpact’s GBS “ecosystem” until the client could fully evolve one of its own.

Proven incubation and execution

The client ecosystem that was being incubated drew on much more than the wealth of resources that Genpact marshaled on the ground in Manila. The client also profited from access to the time-tested strategies and tactics that Genpact uses worldwide. Ultimately, this was a story of locally and globally executing on strategy and partnering with functional and operational specialists who provide unprecedented “project governance” while driving change.

What the incubation model offered was the capacity to get in the country and on the site quickly with minimal lead time f or set up. To build on this early edge, the on-site management that has since been assembled in Manila now includes a roster of industry talent supported by a “seed team” of Genpact pros. This seed team is charged with incubating the core operating and governance structures that the client needs to scale and run its captive.

With each passing quarter, Genpact’s collaborative governance style continues to evolve. Its reengineers worked first on reorganizing personnel by work streams and then on introducing key process-rebuild and migration components. Thereafter, they addressed operational readiness and go-live support. Finally, 100-plus process “blueprints” were created. Long after Genpact’s reengineers had gone, the client could refer to these documents to self-manage the day-to-day process challenges and address each new stage of operational maturity from an ahead-of-the-curve vantage point. Moreover, all this was done in Phase I.

The result is that after putting 100 full-time employees at the Phase 1 incubator site within nine months, the ongoing efforts now call for 200 more to be on-boarded at a standalone location in the city over the next two years.

The result is that after putting 100 full-time employees at the Phase 1 incubator site within nine months, the ongoing efforts now call for 200 more to be on-boarded at a standalone location in the city over the next two years.

From the beginning, Genpact’s intent was to structure an outcome-based relationship in which each concrete benchmark hit and milestone passed engendered greater client confidence in the GBS journey Genpact had mapped and in which its financial rewards were tightly tied to the achievement of the results it first projected.

After Genpact completed the Phase I SSC setup in two-thirds the time it was expected to take based on industry standards and increased the center’s productivity by 22% in the first six months of operation compared to a commitment to a 15% target, the client was so comfortable with the correctness of the current course that it set some bold expansion targets. By the time the broader GBS ecosystem has reached full maturity later this decade, the client expects to have upward of 500 employees working at the Manila SSC.

After 20 years, the management of shared-service and captive platforms, and of business process optimization (BPO) more generally, has evolved to the point where it is possible to neatly tailor operational and commercial constructs to the needs of large, complex companies that are undergoing equally sensitive transitions in their structural evolution.